Housing Finance Reform and Taxpayer Protection Act of 2013

7/28/2019 Housing Finance Reform and Taxpayer Protection Act of 2013

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GRA13267 S.L.C.

113TH CONGRESS1ST SESSION S.

llTo provide secondary mortgage market reform, and for other purposes.

IN THE SENATE OF THE UNITED STATES

llllllllll

Mr. CORKER (for himself, Mr. WARNER, Mr. JOHANNS, Mr. TESTER, Mr.

HELLER, Ms. HEITKAMP, Mr. MORAN, and Mrs. HAGAN) introduced thefollowing bill; which was read twice and referred to the Committee on

llllllllll

A BILL

To provide secondary mortgage market reform, and for other

purposes.

Be it enacted by the Senate and House of Representa-1

tives of the United States of America in Congress assembled,2

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.3

(a) SHORT TITLE.This Act may be cited as the4

Housing Finance Reform and Taxpayer Protection Act5

of 2013.6

(b) TABLE OF CONTENTS.The table of contents for7

this Act is as follows:8

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

TITLE IFEDERAL MORTGAGE INSURANCE CORPORATION


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TITLE IVIMPROVING TRANSPARENCY, ACCOUNTABILITY, AND

EFFICACY WITHIN AFFORDABLE HOUSING

Sec. 401. Affordable housing allocations.

Sec. 402. Housing Trust Fund.

Sec. 403. Capital Magnet Fund.

Sec. 404. Additional taxpayer protections.

TITLE VWIND DOWN OF FANNIE MAE AND FREDDIE MAC

Sec. 501. Repeal of GSE charters.

Sec. 502. Wind down.

Sec. 503. Aligning purpose of conservatorship with FMIC.

Sec. 504. Conforming loan limits.

Sec. 505. Portfolio reduction.

Sec. 506. Repeal of mandatory housing goals.

TITLE VIIMPROVEMENTS TO FUNCTIONING OF HOUSING

MARKET

Sec. 601. Continuation of multifamily business of the enterprises.Sec. 602. Multiple lender issues.

Sec. 603. GAO report on full privatization of secondary mortgage market.

TITLE VIIGENERAL PROVISIONS

Sec. 701. Authority to issue regulations.

Sec. 702. Fair value accounting.

Sec. 703. Rule of construction.

Sec. 704. Severability.

SEC. 2. DEFINITIONS.1

As used in this Act, the following definitions shall2

apply:3

(1) APPROVED BOND GUARANTOR.The term4

approved bond guarantor means any entity that5

provides credit enhancement that is approved by the6

Corporation pursuant to section 214 to guarantee7

the timely payment of principal and interest on secu-8

rities collateralized by eligible mortgages and insured9

by the Corporation.10


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(2) APPROVED ISSUER.The term approved1

issuer means an issuer that is approved by the Cor-2

poration pursuant to section 2133

(A) to issue covered securities; and4

(B) to purchase insurance offered by the5

Corporation pursuant to title II on a covered6

security for which first loss credit enhancement7

has been secured.8

(3) APPROVED PRIVATE MORTGAGE INSURER.9

The term approved private mortgage insurer10

means an insurer that is approved by the Corpora-11

tion pursuant to section 211 to provide private mort-12

gage insurance on eligible mortgages.13

(4) APPROVED SERVICER.The term ap-14

proved servicer means a servicer that is approved15

by the Corporation pursuant to section 212 to ad-16

minister eligible mortgages.17

(5) AREA.The term area18

(A) means a metropolitan statistical area19

as established by the Office of Management and20

Budget; and21

(B) for purposes of paragraph (11)(A)(ii),22

the median 1-family house price for an area23

shall be equal to the median 1-family house24


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price of the county within the area that has the1

highest such median price.2

(6) BOARD; BOARD OF DIRECTORS.The terms3

Board and Board of Directors mean the Board4

of Directors of the Federal Mortgage Insurance Cor-5

poration.6

(7) CHARTER.The term charter means7

(A) with respect to the Federal National8

Mortgage Association, the Federal National9

Mortgage Association Charter Act (12 U.S.C.10

1716 et seq.); and11

(B) with respect to the Federal Home12

Loan Mortgage Corporation, the Federal Home13

Loan Mortgage Corporation Act (12 U.S.C.14

1451 et seq.).15

(8) CORPORATION.The term Corporation16

means the Federal Mortgage Insurance Corporation17

established under title I.18

(9) COVERED SECURITY.The term covered19

security means a mortgage-backed security20

(A) collateralized by eligible mortgages;21

(B) which is issued subject to a standard22

form credit-risk sharing mechanism, product,23

structure, contract, or other securitization24


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agreement developed by the Corporation pursu-1

ant to title II; and2

(C) which is eligible for insurance by the3

Corporation pursuant to title II, which insur-4

ance is purchased by an approved issuer who5

issues covered securities.6

(10) DIRECTOR.The term Director means7

the Director of the Federal Mortgage Insurance Cor-8

poration, unless the context otherwise requires.9

(11) ELIGIBLE MORTGAGE.The term eligible10

mortgage means a mortgage11

(A) that is a residential real estate loan se-12

cured by a property with 1 to 4 single family13

units that has been originated in compliance14

with the provisions of section 1026 of title 1215

of the Code of Federal Regulations, as promul-16

gated by the Bureau of Consumer Financial17

Protection pursuant to section 129C(b) of the18

Truth in Lending Act (15 U.S.C. 1639c(b))19

(commonly referred to as the Ability-to-Repay20

and Qualified Mortgage Rule);21

(B) has a maximum original principal obli-22

gation amount that does not exceed the con-23

forming loan limitation determined under sec-24

tion 504;25


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(C) the outstanding principal balance of1

which at the time of purchase of insurance2

available under title II3

(i) is less than 80 percent of the value4

of the property securing the mortgage;5

(ii) is not less than 80 percent but not6

more than 85 percent of the value of the7

property securing the mortgage, provided8

that not less than 12 percent of the unpaid9

principal balance of the mortgage, account-10

ing for any downpayment required under11

subparagraph (D), is insured by12

(I) an approved private mortgage13

insurer; or14

(II) lender recourse or other15

credit enhancement that16

(aa) meets standards com-17

parable to the standards required18

of private mortgage insurers19

under section 211; and20

(bb) is approved by the Cor-21

poration;22

(iii) is not less than 85 percent but23

not more than 90 percent of the value of24

the property securing the mortgage, pro-25


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vided that not less than 25 percent of the1

unpaid principal balance of the mortgage,2

accounting for any downpayment required3

under subparagraph (D), is insured by4


insurer; or6








poration; or14

(iv) is not less than 90 percent but15

not more than 95 percent of the value of16

the property securing the mortgage, pro-17

vided that not less than 30 percent of the18

unpaid principal balance of the mortgage,19

accounting for any downpayment required20

under subparagraph (D), is insured by21


insurer; or23




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poration;6

(D) having a downpayment which shall be7

equal to not less than 5 percent of purchase8

price of the property securing the mortgage;9

(E) that is insured by an approved State10

licensed title insurance company;11

(F) that contains such terms and provi-12

sions with respect to insurance, property main-13

tenance, repairs, alterations, payment of taxes,14

default, reserves, delinquency charges, fore-15

closure proceedings, anticipation of maturity,16

additional and secondary liens, and other mat-17

ters, including matters that set forth terms and18

provisions for establishing escrow accounts, per-19

forming financial assessments, or limiting the20

amount of any payment made available under21

the mortgage as the Corporation may prescribe;22

and23

(G) that contains such other terms or24

characteristics as the Corporation, in consulta-25


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tion with the Bureau of Consumer Financial1

Protection, may determine necessary or appro-2

priate.3

(12) ENTERPRISE.The term enterprise4

means5

(A) the Federal National Mortgage Asso-6

ciation and any affiliate thereof; and7

(B) the Federal Home Loan Mortgage8

Corporation and any affiliate thereof.9

(13) FEDERAL BANKING AGENCIES.The10

term11

(A) Federal banking agency means, indi-12

vidually, the Board of Governors of the Federal13

Reserve System, the Office of the Comptroller14

of the Currency, the Federal Deposit Insurance15

Corporation, the Bureau of Consumer Financial16

Protection, the National Credit Union Adminis-17

tration, the Securities and Exchange Commis-18

sion, the Commodities Futures Trading Com-19

mission, the Federal Housing Finance Agency,20

and the Secretary of the Treasury; and21

(B) Federal banking agencies means all22

of the agencies referred to in subparagraph (A),23

collectively.24


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(14) FEDERAL HOME LOAN BANK.The term1

Federal Home Loan Bank means a bank estab-2

lished under the authority of the Federal Home3

Loan Bank Act (12 U.S.C. 1421 et. seq).4

(15) FEDERAL HOME LOAN BANK SYSTEM.5

The term Federal Home Loan Bank System6

means the Federal Home Loan Banks and the Of-7

fice of Finance and any authorized subsidiary of one8

or more Federal Home Loan Banks.9

(16) FMIC CERTIFICATION DATE.The term10

FMIC certification date means the date on which11

the Board of Directors certifies that the Corporation12

is operational and able to perform the insurance13

functions for covered securities as provided in this14

Act, which date shall be not later than 5 years after15

the date of enactment of this Act.16

(17) INSURED DEPOSITORY INSTITUTION.The17

term insured depository institution means18

(A) an insured depository institution, as19

defined under section 3 of the Federal Deposit20

Insurance Act (12 U.S.C. 1813); and21

(B) a credit union that meets the defini-22

tion of depository institution as that term is23

defined under section 19(b) of the Federal Re-24

serve Act (12 U.S.C. 461).25


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(18) SENIOR PREFERRED STOCK PURCHASE1

AGREEMENT DEFINED.The term Senior Pre-2

ferred Stock Purchase Agreement means3

(A) the Amended and Restated Senior Pre-4

ferred Stock Purchase Agreement, dated Sep-5

tember 26, 2008, as such Agreement has been6

amended on May 6, 2009, December 24, 2009,7

and August 17, 2012, respectively, and as such8

Agreement may be further amended and re-9

stated, entered into between the Department of10

the Treasury and each enterprise, as applicable;11

and12

(B) any provision of any certificate in con-13

nection with such Agreement creating or desig-14

nating the terms, powers, preferences, privi-15

leges, limitations, or any other conditions of the16

Variable Liquidation Preference Senior Pre-17

ferred Stock of an enterprise issued or sold pur-18

suant to such Agreement.19

(19) TRANSFER DATE.The term transfer20

date means the date that is 1 year after the date21

of enactment of this Act.22


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TITLE IFEDERAL MORTGAGE1

INSURANCE CORPORATION2

SEC. 101. ESTABLISHMENT.3

(a) ESTABLISHMENT.There is hereby established4

the Federal Mortgage Insurance Corporation which shall5

have the powers hereinafter granted.6

(b) PURPOSE.The purpose of the Corporation shall7

be to8

(1) provide liquidity, transparency, and access9

to mortgage credit by supporting a robust secondary10

mortgage market and the production of residential11

mortgage-backed securities; and12

(2) protect the taxpayer from having to absorb13

losses incurred in the secondary mortgage market14

during periods of economic stress.15

(c) FEDERAL STATUS.The Corporation shall be an16

independent agency of the Federal Government.17

(d) SUCCESSION.The Corporation shall have suc-18

cession until dissolved by Act of Congress.19

(e) PRINCIPAL OFFICE.The Corporation shall20

maintain its principal office in the District of Columbia21

and shall be deemed, for purposes of venue in civil actions,22

to be a resident thereof.23

(f) AUTHORITY TO ESTABLISH OTHER OFFICES.24

The Corporation may establish such other offices in such25


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other place or places as the Corporation may deem nec-1

essary or appropriate in the conduct of its business.2

(g) PROHIBITION.The Corporation shall not engage3

in mortgage origination.4

SEC. 102. DIRECTOR.5

(a) ESTABLISHMENT OF POSITION.There is estab-6

lished the position of the Director of the Corporation, who7

shall be the head of the Corporation.8

(b) APPOINTMENT; TERM.9

(1) APPOINTMENT.The Director shall be ap-10

pointed by the President, by and with the advice and11

consent of the Senate, from among individuals12

who13

(A) are citizens of the United States; and14

(B) have a demonstrated technical, aca-15

demic, or professional understanding of, and16

practical, disciplinary, vocational, or regulatory17

experience working in, the mortgage securities18

markets and housing finance.19

(2) TERM.The Director shall be appointed for20

a term of 5 years, unless removed before the end of21

such term for cause by the President.22

(3) VACANCY.23

(A) IN GENERAL.A vacancy in the posi-24

tion of Director that occurs before the expira-25


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tion of the term for which a Director was ap-1

pointed shall be filled in the manner established2

under paragraph (1), and the Director ap-3

pointed to fill such vacancy shall be appointed4

only for the remainder of such term.5

(B) ACTING DIRECTOR.6

(i) DESIGNATION BY THE PRESI-7

DENT.8

(I) ELIGIBLE INDIVIDUALS.If9

the Senate has not confirmed a Direc-10

tor, the President may designate ei-11

ther the individual nominated, but not12

yet confirmed, for the position of Di-13

rector or a member of the Board of14

Directors to serve as the Acting Di-15

rector, and such Acting Director shall16

have all the rights, duties, powers,17

and responsibilities of the Director,18

until such time as a Director is con-19

firmed by the Senate.20

(II) LIMITATION.No individual21

may serve concurrently as the Acting22

Director of the Corporation and the23

Director of the Federal Housing Fi-24

nance Agency.25


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(4) SERVICE AFTER END OF TERM.An indi-1

vidual may serve as the Director after the expiration2

of the term for which appointed until a successor3

has been appointed.4

(5) COMPENSATION.The Director shall be5

compensated at the rate prescribed for level II of the6

Executive Schedule under section 5313 of title 5,7

United States Code.8

(6) RULES OF CONSTRUCTION.No indi-9

vidual10

(A) may serve concurrently as the Director11

of the Corporation and the Director of the Fed-12

eral Housing Finance Agency; and13

(B) that has, at any time prior to, on, or14

after the date of enactment of this Act, served15

as the Director of the Federal Housing Finance16

Agency may serve as the Director of the Cor-17

poration.18

(c) MEMBERSHIP ON FSOC.The Dodd-Frank Wall19

Street Reform and Consumer Protection Act is amend-20

ed21

(1) in section 2, by amending paragraph22

(12)(E) to read as follows:23

(E) the Federal Mortgage Insurance Cor-24

poration, with respect to25


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(i) the Mortgage Insurance Fund es-1

tablished under title II of the Housing Fi-2

nance Reform and Taxpayer Protection3

Act of 2013; and4

(ii) the Federal Home Loan Banks5

or the Federal Home Loan Bank Sys-6

tem.; and7

(2) in section 111(b)(1)(H), by striking Direc-8

tor of the Federal Housing Finance Agency and in-9

serting Chairperson of the Federal Mortgage Insur-10

ance Corporation.11

SEC. 103. BOARD OF DIRECTORS.12

(a) BOARD OF DIRECTORS.13

(1) VOTING MEMBERS.The management of14

the Corporation shall be vested in a Board of Direc-15

tors consisting of 5 voting members16

(A) 1 of whom shall be the Director, who17

shall serve as Chairperson of the Board; and18

(B) 4 of whom shall be appointed by the19

President, by and with the advice and consent20

of the Senate, from among individuals who are21

citizens of the United States22

(i) 1 of whom shall have demonstrated23

technical, academic, or professional under-24

standing of, and practical, disciplinary, vo-25


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cational, or regulatory experience working1

in, the field of asset management;2

(ii) 1 of whom shall have dem-3

onstrated technical, academic, or profes-4

sional understanding of, and practical, dis-5

ciplinary, vocational, or regulatory experi-6

ence working in, mortgage insurance mar-7

kets;8

(iii) 1 of whom shall have a dem-9




ence working with, lenders having less than13

$10,000,000,000 in total assets; and14

(iv) 1 of whom shall have a dem-15




ence working with, multifamily housing de-19

velopment.20

(2) NON-VOTING MEMBER.The President21

shall appoint the Director of the Federal Housing22

Finance Agency as an additional non-voting member23

of the Board of Directors. The Director of the Fed-24

eral Housing Finance Agency shall serve as non-vot-25


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ing member of the Board of Directors until such1

time as that position is abolished pursuant to title2

III.3

(3) INDEPENDENCE.4

(A) IN GENERAL.Each voting member of5

the Board of Directors shall be independent6

and neutral and maintain a fiduciary relation-7

ship to the Corporation in performing his or her8

duties.9

(B) INDEPENDENCE DETERMINATION.In10

order to be considered independent for purposes11

of this paragraph, a voting member of the12

Board of Directors13

(i) may not, other than in his or her14

capacity as a member of the Board of Di-15

rectors or any committee thereof16

(I) accept any consulting, advi-17

sory, or other compensatory fee from18

the Corporation; or19

(II) be a person associated with20

the Corporation or with any affiliated21

company thereof; and22

(ii) shall be disqualified from any de-23

liberation involving any transaction of the24

Corporation in which the member has a fi-25


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nancial interest in the outcome of the1

transaction.2

(4) RULE OF CONSTRUCTION.No individual3

that has, at any time prior to, on, or after the date4

of enactment of this Act, served as the Director or5

Acting Director of the Federal Housing Finance6

Agency may serve as a voting member of the Board7

of Directors.8

(b) ADMINISTRATION.Except as otherwise may pro-9

vided in this Act, the Board of Directors shall administer10

the affairs of the Corporation fairly and impartially and11

without discrimination.12

(c) CONSULTATION.The Board of Directors may, in13

carrying out any duty, responsibility, requirement, or ac-14

tion authorized under this Act, consult with the Federal15

banking agencies or any individual Federal banking agen-16

cy, as the Board determines necessary and appropriate.17

(d) TERMS.18

(1) APPOINTED MEMBERS.Each appointed19

voting member shall be appointed for a term of 520

years and shall serve on a full-time basis.21

(2) INTERIM APPOINTMENTS.Any voting22

member appointed to fill a vacancy occurring before23

the expiration of the term for which such members24


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predecessor was appointed shall be appointed only1

for the remainder of such term.2

(3) CONTINUATION OF SERVICE.The Chair-3

person and each appointed voting member may con-4

tinue to serve after the expiration of the term of of-5

fice to which such member was appointed until a6

successor has been appointed and qualified.7

(e) VACANCY.A vacancy in the voting membership8

of the Board of Directors shall not affect the powers of9

the Board, and shall be filled in the manner in which the10

original appointment was made.11

(f) VOTING.A majority vote of all voting members12

of the Board of Directors is necessary to resolve all voting13

issues of the Corporation.14

(g) MEETINGS.The Board of Directors shall meet15

in accordance with the bylaws of the Corporation16

(1) at the call of the Chairperson; and17

(2) not less frequently than once each month.18

(h) QUORUM.Three voting members of the Board19

of Directors then in office shall constitute a quorum.20

(i) BYLAWS.A majority of the voting members of21

the Board of Directors may amend the bylaws of the Cor-22

poration.23


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(j) ATTENDANCE.Members of the Board of Direc-1

tors may attend meetings of the Corporation and vote in2

person, via telephone conference, or via video conference.3

(k) INELIGIBILITY FOR OTHER OFFICES DURING4

SERVICE.5

(1) IN GENERAL.No voting member of the6

Board of Directors may during the time such mem-7

ber is in office8

(A) be an officer or director of any insured9

depository institution, depository institution10

holding company, Federal Reserve bank, Fed-11

eral home loan bank, approved servicer, ap-12

proved private mortgage insurer, institution13

that originates eligible mortgages, or institution14

that issues a covered security; or15

(B) hold stock or a controlling interest in16

any insured depository institution or depository17

institution holding company, approved servicer,18

approved private mortgage insurer, institution19

that originates eligible mortgages, or institution20

that issues a covered security.21

(2) CERTIFICATION.Upon taking office, each22

voting member of the Board of Directors shall cer-23

tify under oath that such member has complied with24


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this subsection and such certification shall be filed1

with the secretary of the Board of Directors.2

(l) STATUS OF EMPLOYEES.3

(1) IN GENERAL.A director, member, officer,4

or employee of the Corporation has no liability under5

the Securities Act of 1933 (15 U.S.C. 77a et seq.)6

with respect to any claim arising out of or resulting7

from any act or omission by such person within the8

scope of such persons employment in connection9

with any transaction involving the Corporation. This10

subsection shall not be construed to limit personal li-11

ability for criminal acts or omissions, willful or mali-12

cious misconduct, acts or omissions for private gain,13

or any other acts or omissions outside the scope of14

such persons employment.15

(2) EFFECT ON OTHER LAW.16

(A) IN GENERAL.This subsection does17

not affect18

(i) any other immunities and protec-19

tions that may be available to such person20

under applicable law with respect to such21

transactions; or22

(ii) any other right or remedy against23

the Corporation, against the United States24

under applicable law, or against any per-25


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son other than a person described in para-1

graph (1) participating in such trans-2

actions.3

(B) RULE OF CONSTRUCTION.This sub-4

section shall not be construed to limit or alter5

in any way the immunities that are available6

under applicable law for Federal officials and7

employees not described in this subsection.8

SEC. 104. OFFICE OF THE INSPECTOR GENERAL.9

(a) OFFICE OF INSPECTOR GENERAL.10

(1) IN GENERAL.There is established the Of-11

fice of the Inspector General of the Federal Mort-12

gage Insurance Corporation. The head of the Office13

of the Inspector General of the Federal Mortgage14

Insurance Corporation is the Inspector General of15

the Federal Mortgage Insurance Corporation (in this16

section referred to as the Inspector General), who17

shall be appointed by the President, by and with the18

advice and consent of the Senate.19

(2) ADDITIONAL RESPONSIBILITIES.In addi-20

tion to carrying out the requirements established21

under the Inspector General Act of 1978 (5. U.S.C.22

App.), the Inspector General shall23


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(A) conduct, supervise, and coordinate au-1

dits and investigations relating to the programs2

and operations of the Corporation3

(i) to ensure that the first loss posi-4

tion that the Corporation requires of pri-5

vate market holders of covered securities6

insured under this Act is adequate to cover7

losses that might be incurred as a result of8

adverse economic conditions, wherein such9

conditions are generally consistent with the10

economic conditions, including national11

home price declines, observed in the United12

States during moderate to severe reces-13

sions experienced during the last 10014

years; and15

(ii) with respect to the16

(I) oversight and supervision of17

the Federal Home Loan Banks and18

the Federal Home Loan Bank Sys-19

tem; and20

(II) the contracting practices and21

procedures of the Corporation; and22

(B) recommend policies for the purpose of23

addressing any deficiencies, inefficiencies, gaps,24


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or failures in the administration of such pro-1

grams and operations.2

(3) INSPECTOR GENERAL REPORT; REPORT OF3

INDEPENDENT ACTUARY.Beginning 1 year after4

the FMIC certification date, and annually there-5

after, the Inspector General and an independent ac-6

tuary contracted for by the Director shall each con-7

duct an examination and issue a separate report re-8

garding9

(A) the adequacy of insurance fees charged10

by the Board of Directors under title II; and11

(B) the adequacy of the Mortgage Insur-12

ance Fund established under title II.13

(b) AMENDMENTS TO INSPECTOR GENERAL ACT OF14

1978.Section 11 of the Inspector General Act of 197815

(5 U.S.C. App.) is amended16

(1) in paragraph (1), by inserting Chairperson17

of the Federal Mortgage Insurance Corporation;18

after the Director of the Federal Housing Finance19

Agency;; and20

(2) in paragraph (2), by inserting the Federal21

Mortgage Insurance Corporation, after the Fed-22

eral Housing Finance Agency,.23

(c) COMPENSATION.The annual rate of basic pay24

of the Inspector General shall be the annual rate of basic25


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pay provided for positions at level III of the Executive1

Schedule under section 5314 of title 5, United States2

Code.3

SEC. 105. STAFF, EXPERTS, AND CONSULTANTS.4

(a) COMPENSATION.5

(1) IN GENERAL.The Board of Directors may6

appoint and fix the compensation of such officers,7

attorneys, economists, examiners, and other employ-8

ees as may be necessary for carrying out the func-9

tions of the Corporation.10

(2) RATES OF PAY.Rates of basic pay and the11

total amount of compensation and benefits for all12

employees of the Corporation may be13

(A) set and adjusted by the Board of Di-14

rectors without regard to the provisions of15

chapter 51 or subchapter III of chapter 53 of16

title 5, United States Code; and17

(B) reasonably increased, notwithstanding18

any limitation set forth in paragraph (3), if the19

Board of Directors determines such increases20

are necessary to attract and hire qualified em-21

ployees.22

(3) PARITY.The Board of Directors may pro-23

vide additional compensation and benefits to employ-24

ees of the Corporation, of the same type of com-25


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pensation or benefits that are then being provided by1

any agency referred to under section 1206 of the Fi-2

nancial Institutions Reform, Recovery, and Enforce-3

ment Act of 1989 (12 U.S.C. 1833b) or, if not then4

being provided, could be provided by such an agency5

under applicable provisions of law, rule, or regula-6

tion. In setting and adjusting the total amount of7

compensation and benefits for employees, the Board8

of Directors shall consult with and seek to maintain9

comparability with the agencies referred to under10

section 1206 of the Financial Institutions Reform,11

Recovery, and Enforcement Act of 1989 (12 U.S.C.12

1833b).13

(b) DETAIL OF GOVERNMENT EMPLOYEES.Upon14

the request of the Board of Directors, any Federal Gov-15

ernment employee may be detailed to the Corporation16

without reimbursement, and such detail shall be without17

interruption or loss of civil service status or privilege.18

(c) EXPERTS AND CONSULTANTS.The Board of Di-19

rectors may procure the services of experts and consult-20

ants as the Board considers necessary or appropriate.21

(d) TECHNICAL AND PROFESSIONALADVISORY COM-22

MITTEES.The Board of Directors may appoint such spe-23

cial advisory, technical, or professional committees as may24

be useful in carrying out the functions of the Corporation.25


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SEC. 106. REPORTS; TESTIMONY; AUDITS.1

(a) REPORTS.2

(1) IN GENERAL.The Corporation shall sub-3

mit, on an annual basis, to the Committee on Bank-4

ing, Housing, and Urban Affairs of the Senate and5

the Committee on Financial Services of the House of6

Representatives a written report of its operations,7

activities, budget, receipts, and expenditures for the8

preceding 12-month period.9

(2) CONTENTS OF REPORT.The report re-10

quired under subsection (a) shall include an analysis11

of12

(A) with respect to the Mortgage Insur-13

ance Fund established under section 20314

(i) the current financial condition of15

the Mortgage Insurance Fund;16

(ii) the exposure of the Mortgage In-17

surance Fund to changes in those eco-18

nomic factors most likely to affect the con-19

dition of that fund;20

(iii) a current estimate of the re-21

sources needed for the Mortgage Insurance22

Fund to achieve the purposes of this Act;23

and24

(iv) any findings, conclusions, and rec-25

ommendations for legislative and adminis-26


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trative actions considered appropriate to1

the future activities of the Corporation;2

(B) the secondary mortgage market, the3

housing market, and the economy, including4

through use of stress tests, and how such anal-5

ysis was used to determine and set the reserve6

ratio for the Mortgage Insurance Fund for the7

preceding 12-month period;8

(C) whether or not the actual reserve ratio9

of the Mortgage Insurance Fund met10

(i) the reserve ratio set for the pre-11

ceding 12-month period; or12

(ii) the reserve ratio goals established13

in section 203(e);14

(D) how the Corporation intends to ensure15

that the goals set for the reserve ratio for the16

Mortgage Insurance Fund are to be met and17

maintained for the next 12-month period, and18

such analysis shall include a detailed and de-19

scriptive plan of the actions that the Corpora-20

tion intends to take pursuant to its authorities21

under this Act;22

(E) how the Corporation has provided li-23

quidity, transparency, and access to mortgage24

credit in its support of a robust secondary25


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mortgage market and the production of residen-1

tial mortgage-backed securities;2

(F) the state of the private label mortgage-3

backed securities market, and such analysis4

shall include the submission of a reasonable set5

of administrative, regulatory, and legislative6

proposals on how to limit the Federal Govern-7

ments footprint in the secondary mortgage8

market;9

(G) the effect that further decreases in10

loan limits would have on the secondary mort-11

gage market, the housing market, and the econ-12

omy; and13

(H) the state of the global covered bond14

market.15

(b) TESTIMONY.The Chairperson of the Corpora-16

tion, on a biannual basis, shall provide testimony to the17

Committee on Banking, Housing, and Urban Affairs of18

the Senate and the Committee on Financial Services of19

the House of Representatives.20

(c) AUDIT OF CORPORATION.21

(1) ANNUAL AUDIT.The Comptroller General22

of the United States shall annually audit the finan-23

cial transactions of the Corporation in accordance24

with the United States generally accepted govern-25


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ment auditing standards as may be prescribed by1

the Comptroller General.2

(2) PLACE OF AUDIT.The audit required3

under this subsection shall be conducted at the place4

or places where accounts of the Corporation are nor-5

mally kept.6

(3) ACCESS.The representatives of the Comp-7

troller General shall have access to the personnel8

and to all books, accounts, documents, papers,9

records (including electronic records), reports, files,10

and all other papers, automated data, or property11

belonging to or under the control of or used or em-12

ployed by the Corporation pertaining to its financial13

transactions and necessary to facilitate the audit re-14

quired under this subsection, and such representa-15

tives shall be afforded full facilities for verifying16

transactions with the balances or securities held by17

depositories, fiscal agents, and custodians.18

(4) POSSESSION AND CUSTODY.All such19

books, accounts, documents, records, reports, files,20

papers, and property of the Corporation used to21

carry out the audit required under this subsection22

shall remain in the possession and custody of the23

Corporation.24


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(5) PERMISSIBLE DUPLICATION.The Comp-1

troller General may obtain and duplicate any such2

books, accounts, documents, records, working pa-3

pers, automated data and files, or other information4

relevant to such audit without cost to the Comp-5

troller General and the Comptroller Generals right6

of access to such information shall be enforceable7

pursuant to section 716(c) of title 31, United States8

Code.9

(6) REPORT.10

(A) SUBMISSION TO CONGRESS.The11

Comptroller General shall submit to Congress a12

report of each annual audit conducted under13

this subsection.14

(B) REQUIRED CONTENT.The report to15

Congress required under subparagraph (A)16

shall17

(i) set forth the scope of the audit;18

and19

(ii) include20

(I) the statement of assets and li-21

abilities and surplus or deficit;22

(II) the statement of income and23

expenses;24


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(III) the statement of sources1

and application of funds; and2

(IV) such comments and infor-3

mation as the Comptroller General4

may deem necessary to inform Con-5

gress of the financial operations and6

condition of the Corporation, together7

with such recommendations with re-8

spect thereto as the Comptroller Gen-9

eral may deem advisable.10

(C) COPIES.A copy of each report re-11

quired under subparagraph (A) shall be fur-12

nished to the President and to the Chairperson13

of the Corporation at the time such report is14

submitted to the Congress.15

(7) ASSISTANCE AND COSTS.16

(A) PERMITTED USE OF OUTSIDE ASSIST-17

ANCE.For the purpose of conducting an audit18

under this subsection, the Comptroller General19

may employ by contract, without regard to sec-20

tion 3709 of the Revised Statutes of the United21

States (41 U.S.C. 5), professional services of22

firms and organizations of certified public ac-23

countants for temporary periods or for special24

purposes.25


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(B) COST OF AUDIT COVERED BY COR-1

PORATION.2

(i) IN GENERAL.Upon the request3

of the Comptroller General, the Chair-4

person of the Corporation shall transfer to5

the Comptroller General from funds avail-6

able, the amount requested by the Comp-7

troller General to cover the reasonable8

costs of any audit and report conducted by9

the Comptroller General pursuant to this10

subsection.11

(ii) CREDIT OF FUNDS.The Comp-12

troller General shall credit funds trans-13

ferred under clause (i) to the account at14

the Treasury established for salaries and15

expenses of the Government Accountability16

Office, and such amounts shall be available17

upon receipt and without fiscal year limita-18

tion to cover the full costs of the audit and19

report.20

SEC. 107. INITIAL FUNDING.21

(a) IN GENERAL.Section 1316 of the Federal22

Housing Enterprises Financial Safety and Soundness Act23

of 1992 (12 U.S.C. 4516) is amended by adding at the24

end the following:25


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(i) ANNUAL ASSESSMENTS RELATING TO INITIAL1

FUNDING OF THE FMIC.Notwithstanding title V of the2

Housing Finance Reform and Taxpayer Protection Act of3

2013 or any other provision of law, for the period begin-4

ning on the date of enactment of this subsection and end-5

ing on the FMIC certification date (as that date is set6

forth under section 2(16) of the Housing Finance Reform7

and Taxpayer Protection Act of 2013, the Director, in8

consultation with the Chairperson of the Federal Mort-9

gage Insurance Corporation, shall establish and collect10

from the enterprises annual assessments in addition to11

those required under subsection (a) in an amount not ex-12

ceeding the amount sufficient to provide for the reasonable13

costs (including administrative costs) and expenses of the14

Corporation. All amounts collected under this subsection15

shall be transferred to the Federal Mortgage Insurance16

Corporation. The annual assessment shall be payable17

semiannually for each fiscal year, on October 1 and April18

1..19

(b) TREATMENT OFASSESSMENTS.20

(1) DEPOSIT.Amounts received by the Cor-21

poration from assessments imposed under section22

1316(i) of the Federal Housing Enterprises Finan-23

cial Safety and Soundness Act of 1992 shall be de-24

posited by the Corporation in the manner provided25


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in section 5234 of the Revised Statutes of the1

United States (12 U.S.C. 192) for monies deposited2

by the Comptroller of the Currency.3

(2) NOT GOVERNMENT FUNDS.The amounts4

received by the Corporation from any assessment5

imposed under section 1316(i) of the Federal Hous-6

ing Enterprises Financial Safety and Soundness Act7

of 1992 shall not be construed to be Government or8

public funds or appropriated money.9

(3) NO APPORTIONMENT OF FUNDS.Notwith-10

standing any other provision of law, the amounts re-11

ceived by the Corporation from any assessment im-12

posed under section 1316(i) of the Federal Housing13

Enterprises Financial Safety and Soundness Act of14

1992 shall not be subject to apportionment for the15

purpose of chapter 15 of title 31, United States16

Code, or under any other authority.17

(4) USE OF FUNDS.18

(A) IN GENERAL.The Corporation may19

use any amounts received from assessments im-20

posed under section 1316(i) of the Federal21

Housing Enterprises Financial Safety and22

Soundness Act of 199223

(i) for compensation of the employees24

of the Corporation; and25


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GRA13267 S.L.C.

(ii) for all other expenses of the Cor-1

poration.2

(B) TREASURY INVESTMENTS.The Cor-3

poration may request the Secretary of the4

Treasury to invest such portions of amounts re-5

ceived from assessments imposed under section6

1316(i) of the Federal Housing Enterprises Fi-7

nancial Safety and Soundness Act of 1992 that,8

in the discretion of the Corporation, are not re-9

quired to meet the current working needs of the10

Corporation.11

(C) GOVERNMENT OBLIGATIONS.Pursu-12

ant to a request under subparagraph (B), the13

Secretary of the Treasury shall invest such14

amounts in Government obligations15

(i) guaranteed as to principal and in-16

terest by the United States with maturities17

suitable to the needs of the Corporation;18

and19

(ii) bearing interest at a rate deter-20

mined by the Secretary of the Treasury21

taking into consideration current market22

yields on outstanding marketable obliga-23

tions of the United States of comparable24

maturity.25


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TITLE IIDUTIES, RESPONSIBIL-1

ITIES, AND STRUCTURE OF2

THE FMIC3

Subtitle ADuties and Authorities4

SEC. 201. DUTIES AND RESPONSIBILITIES OF THE FMIC.5

(a) DUTIES.The principal duties of the Corporation6

shall be to7

(1) carry out this Act in a manner that8

(A) minimizes any potential long-term neg-9

ative cost on the taxpayer; and10

(B) ensures, to the maximum extent pos-11

sible12

(i) a liquid and resilient housing fi-13

nance market; and14

(ii) the availability of mortgage credit;15

(2) develop standard form credit risk-sharing16

mechanisms, products, structures, contracts, or17

other security agreements that require private mar-18

ket holders of a covered security insured under this19

Act to assume the first loss position with respect to20

losses incurred on such securities;21

(3) provide insurance on any covered security22

for which private market holders of such security23

have assumed the first loss position with respect to24

losses that may be incurred on such security in25


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order to provide a liquid and resilient housing fi-1

nance market;2

(4) provide leadership to the housing finance3

market to help ensure that all geographic locations4

have access to mortgage credit;5

(5) charge and collect fees in exchange for pro-6

viding such insurance, whereby such fees shall be7

sufficient to protect the taxpayer from the risk of8

providing such insurance and to fund the activities9

and operations of the Corporation;10

(6) establish and maintain a Mortgage Insur-11

ance Fund;12

(7) facilitate securitization of eligible mortgages13

originated by credit unions and community and mid-14

size banks without securitization capabilities;15

(8) ensure discipline and integrity in the mar-16

ket for covered securities by setting standards for17

the approval of private mortgage insurers, servicers,18

issuers, and bond guarantors;19

(9) establish, operate, and maintain a database20

for the collection, public use, and dissemination of21

uniform loan level information on eligible mortgages;22

(10) develop, adopt, and publish standard uni-23

form securitization agreements for covered securi-24

ties;25


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GRA13267 S.L.C.

(11) establish, operate, and maintain an elec-1

tronic registry system for eligible mortgages that2

collateralize covered securities insured under this3

Act;4

(12) oversee and supervise the common5

securitization platform developed by the business en-6

tity announced by the Federal Housing Finance7

Agency and established by the enterprises; and8

(13) ensure that credit unions and community9

and mid-size banks10

(A) have equal access to any such common11

securitization platform and any other12

securitization platforms; and13

(B) are not, in their access or use of such14

platforms, discriminated against through dis-15

counts for volume pricing or other mechanisms.16

(b) SCOPE OF AUTHORITY.The authority of the17

Corporation shall include the authority to exercise such18

incidental powers as may be necessary or appropriate to19

fulfill the duties and responsibilities of the Corporation set20

forth under subsection (a).21

(c) DELEGATION OFAUTHORITY.The Board of Di-22

rectors may delegate to officers and employees of the Cor-23

poration any of the functions, powers, or duties of the Cor-24


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GRA13267 S.L.C.

poration, as the Board of Directors determines appro-1

priate.2

SEC. 202. STANDARD FORM CREDIT RISK-SHARING MECHA-3

NISMS, PRODUCTS, STRUCTURES, CON-4

TRACTS, OR OTHER SECURITY AGREEMENTS.5

(a) REQUIREMENTS; SHARE OF LOSS; DIVERSITY.6

Pursuant to section 201(a)(2), the Corporation shall de-7

velop standard form credit-risk sharing mechanisms, prod-8

ucts, structures, contracts, or other security agreements9

which shall require that the first loss position of private10

market holders of a covered security insured under this11

Act12

(1) is adequate to cover losses that might be in-13

curred as a result of adverse economic conditions,14

wherein such conditions are generally consistent with15

the economic conditions, including national home16

price declines, observed in the United States during17

moderate to severe recessions experienced during the18

last 100 years; and19

(2) is not less than 10 percent of the principal20

or face value of the covered security.21

(b) DEVELOPMENT WINDOW FOR RISK-SHARING22

MECHANISMS.23

(1) IN GENERAL.The Corporation shall com-24

plete the development and implementation of the25


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mechanisms, products, structures, contracts, or1

other security agreements required under subsection2

(a) not later than 5 years after the date of enact-3

ment of this Act.4

(2) EXAMINATION OF VARIOUS MECHANISMS.5

In developing the mechanisms, products, structures,6

contracts, or other security agreements required7

under subsection (a), the Corporation shall8

(A) examine proposals that include a sen-9

ior-subordinated deal structure, credit-linked10

structures, and the use of regulated guarantors11

with sufficient equity capital to absorb losses12

associated with moderate or severe economic13

downturns;14

(B) consider any risk-sharing mechanisms,15

products, structures, contracts, or other secu-16

rity agreements undertaken by the business en-17

tity announced by the Federal Housing Finance18

Agency and established by the enterprises to19

provide a common securitization platform for20

issuers in the secondary mortgage market;21

(C) consider how each proposed mecha-22

nism, product, structure, contract, or other se-23

curity agreement24


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(i) minimizes any potential long-term1

negative cost to the taxpayer;2

(ii) impacts the availability of mort-3

gage credit for4

(I) small financial institutions,5

such as credit unions and community6

and mid-size banks; and7

(II) consumers;8

(iii) influences mortgage affordability;9

(iv) allows for loan modifications and10

foreclosure prevention alternatives;11

(v) interacts with the To-Be-An-12

nounced market; and13

(vi) facilitates market liquidity and re-14

siliency; and15

(D) ensure that lenders of all sizes and16

from all geographic locations, including rural lo-17

cations, have equitable access to secondary18

mortgage market financing.19

(3) REPORT.20

(A) IN GENERAL.Not later than 1 year21

after the date of enactment of this Act, and an-22

nually thereafter until the end of the 5-year pe-23

riod provided in paragraph (1), the Corporation24

shall submit a report to the Committee on25


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GRA13267 S.L.C.

Banking, Housing, and Urban Affairs of the1

Senate and the Committee on Financial Serv-2

ices of the House of Representatives that3

(i) details the benefits and drawbacks4

of each mechanism, product, structure,5

contract, or other security agreement that6

the Director considered in carrying out the7

requirement of this section;8

(ii) describes the operation and execu-9

tion of any mechanisms, products, struc-10

tures, contracts, or other security agree-11

ments that the Director determines best12

fulfills the requirements of this section;13

and14

(iii) explains how the Corporation ar-15

rived at the determination made under16

clause (ii).17

(B) SUBSEQUENT REPORTS.After the ex-18

piration of the 5-year period provided in para-19

graph (1) and the submission of the report re-20

quired under subparagraph (A), each time the21

Corporation develops an additional standard22

form credit risk-sharing mechanism, product,23

structure, contract, or other security agreement24

that fulfills the requirements of this section, the25


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GRA13267 S.L.C.

Corporation shall submit a report to the Com-1

mittee on Banking, Housing, and Urban Affairs2

of the Senate and the Committee on Financial3

Services of the House of Representatives ad-4

dressing the identical concerns set forth under5

clauses (i) through (iii) of subparagraph (A).6

SEC. 203. MORTGAGE INSURANCE FUND.7

(a) ESTABLISHMENT.There is established the8

Mortgage Insurance Fund, which the Corporation shall9

(1) maintain and administer; and10

(2) use to cover losses incurred on covered secu-11

rities insured under this Act, when such losses ex-12

ceed the first position losses absorbed by private13

market holders of such securities.14

(b) DEPOSITS.The Mortgage Insurance Fund shall15

be credited with any16

(1) insurance fee amounts required to be depos-17

ited in the Fund under this section;18

(2) guarantee fee amounts collected under sec-19

tion 601; and20

(3) amounts earned on investments pursuant to21

subsection (h).22

(c) FIDUCIARY RESPONSIBILITY.The Corporation23

has the responsibility to ensure that the Mortgage Insur-24

ance Fund remains financially sound.25


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(d) USE.1

(1) IN GENERAL.The Mortgage Insurance2

Fund shall be solely available to the Corporation for3

use by the Corporation to carry out the functions4

authorized by this Act and may not be used or oth-5

erwise diverted to cover any other expense of the6

Federal Government.7

(2) EXEMPTION FROM APPORTIONMENT.Not-8

withstanding any other provision of law, amounts re-9

ceived by the Mortgage Insurance Fund pursuant to10

any fees collected under this section shall not be11

subject to apportionment for the purposes of chapter12

15 of title 31, United States Code, or under any13

other authority.14

(e) RESERVE RATIO GOALS FOR MORTGAGE INSUR-15

ANCE FUND.The Corporation shall endeavor to ensure16

that the Mortgage Insurance Fund attains a reserve bal-17

ance18

(1) of 1.25 percent of the sum of the out-19

standing principal balance of the covered securities20

for which insurance is being provided under this title21

within 5 years of the FMIC certification date, and22

to strive to maintain such ratio thereafter, subject to23

subparagraph (B); and24


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(2) of 2.50 percent of the sum of the out-1

standing principal balance of the covered securities2

for which insurance is being provided under this title3

within 10 years of the FMIC certification date, and4

to strive to maintain such ratio at all times there-5

after.6

(f) MAINTENANCE OF RESERVE RATIO; ESTABLISH-7

MENT OF FEES.8

(1) ESTABLISHMENT OF FEES.The Corpora-9

tion shall charge and collect a fee, and may in its10

discretion increase or decrease such fee, in connec-11

tion with any insurance provided under this title12

to13

(A) achieve and maintain the reserve ratio14

goals established under subsection (e);15

(B) achieve such reserve ratio goals, if the16

actual balance of such reserve is below the goal17

amounts established under subsection (e); and18

(C) fund the operations of the Corporation.19

(2) FEE CONSIDERATIONS.In exercising the20

authority granted under paragraph (1), the Corpora-21

tion shall consider22

(A) the expected operating expenses of the23

Mortgage Insurance Fund;24


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GRA13267 S.L.C.

(B) the risk of loss to the Mortgage Insur-1

ance Fund in carrying out the requirements2

under this Act;3

(C) the risk presented by, and the loss ab-4

sorption capacity of, the credit enhancement5

that is provided on the pool of eligible mort-6

gages collateralizing the covered security to be7

insured under this title;8

(D) economic conditions generally affecting9

the mortgage markets;10

(E) the extent to which the reserve ratio of11

the Mortgage Insurance Fund met12

(i) the reserve ratio set for the pre-13

ceding 12-month period; or14

(ii) the reserve ratio goals established15

in subsection (e); and16

(F) any other factor that the Corporation17

determines appropriate.18

(3) FEE UNIFORMITY.The fee required under19

paragraph (1)20

(A) shall be set at a uniform amount appli-21

cable to all institutions purchasing insurance22

under this title;23

(B) may not vary24

(i) by geographic location; or25


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GRA13267 S.L.C.

(ii) by the size of the institution to1

which the fee is charged; and2

(C) may not be based on the volume of in-3

surance to be purchased by an approved issuer.4

(4) DEPOSIT INTO MORTGAGE INSURANCE5

FUND.Any fee amounts collected under this sub-6

section shall be deposited in the Mortgage Insurance7

Fund.8

(g) FULL FAITH AND CREDIT.The full faith and9

credit of the United States is pledged to the payment of10

all amounts from the Mortgage Insurance Fund which11

may be required to be paid under any insurance provided12

under this title.13

(h) INVESTMENTS.Amounts in the Mortgage Insur-14

ance Fund that are not otherwise employed15

(1) shall be invested in obligations of the16

United States; and17

(2) may not be invested in any covered security18

insured under this Act.19

SEC. 204. INSURANCE.20

(a) AUTHORITY.The Corporation shall, upon appli-21

cation and in exchange for a fee in accordance with section22

203(f), insure the payment of principal and interest on23

a covered security with respect to losses that may be in-24

curred on such security.25


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GRA13267 S.L.C.

(b) PRECONDITION; ENSURING PLACEMENT OF1

FIRST LOSS CAPITAL.The Corporation shall develop2

standards and processes to ensure that prior to making3

any commitment to provide insurance under this section4

that private market holders have taken first loss position5

in a covered security and that such holders have sufficient6

capital to cover their risk-sharing obligations.7

(c) CASH PAYMENTS; CONTINUED OPERATIONS.In8

the event of a payment default on an eligible mortgage9

that collateralizes a covered security insured under this10

section that exceeds the first loss position assumed by a11

private market holder or that, in the case of an approved12

bond guarantor, if the guarantor has become insolvent, the13

Corporation shall14

(1) pay, in cash when due, any shortfalls in15

payment of principal and interest under the eligible16

mortgage; and17

(2) continue to charge and collect any fees for18

the provision of insurance (in accordance with sec-19

tion 203(f)) relating to the covered security.20

(d) FULL FAITH AND CREDIT.The full faith and21

credit of the United States is pledged to the payment of22

all amounts which may be required to be paid under any23

insurance provided under this section.24


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(e) PROHIBITION ON FEDERAL ASSISTANCE.Not-1

withstanding any other provision of law, no Federal funds2

may be used to purchase or guarantee obligations of, issue3

lines of credit to, provide direct or indirect access to any4

financing provided by the United States Government to,5

or provide direct or indirect grants and aid to any private6

market holder of the first loss position on a covered secu-7

rity which, on or after the date of enactment of this Act,8

has defaulted on its obligations, is at risk of defaulting,9

or is likely to default, absent such assistance from the10

United States Government.11

SEC. 205. AUTHORITY TO PROTECT TAXPAYERS IN UN-12

USUAL AND EXIGENT MARKET CONDITIONS.13

(a) IN GENERAL.If the Corporation, upon the writ-14

ten agreement of the Chairman of the Board of Governors15

of the Federal Reserve System and the Secretary of the16

Treasury, and in consultation with the Secretary of Hous-17

ing and Urban Development, determines that unusual and18

exigent circumstances have created or threatened to create19

an anomalous lack of mortgage credit availability within20

the housing markets that could materially and severely21

disrupt the functioning of the housing finance system of22

the United States, the Corporation may, for a period not23

to exceed 6 months, provide insurance in accord with sec-24

tion 204 to any covered security regardless of whether25


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GRA13267 S.L.C.

such security has satisfied the requirements of section1

202(a).2

(b) CONSIDERATIONS.In exercising the authority3

granted under subsection (a), the Corporation shall con-4

sider the severity of the conditions present in the housing5

markets and the risks presented to the Mortgage Insur-6

ance Fund in exercising such authority.7

(c) LIMITATION.The authority granted to the Cor-8

poration under subsection (a) may not be exercised more9

than once in any given 3-year period.10

SEC. 206. GENERAL POWERS.11

(a) CORPORATE POWERS.The Federal Mortgage12

Insurance Corporation shall have power13

(1) to adopt, alter, and use a corporate seal,14

which shall be judicially noticed;15

(2) to enter into and perform contracts, leases,16

cooperative agreements, or other transactions, on17

such terms as it may deem appropriate, with any18

agency or instrumentality of the United States, or19

with any State, Territory, or possession, or the Com-20

monwealth of Puerto Rico, or with any political sub-21

division thereof, or with any person, firm, associa-22

tion, or corporation;23


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(3) to execute, in accordance with its bylaws, all1

instruments necessary or appropriate in the exercise2

of any of its powers;3

(4) in its corporate name, to sue and to be4

sued, and to complain and to defend, in any court5

of competent jurisdiction, State or Federal, but no6

attachment, injunction, or other similar process,7

mesne or final, shall be issued against the property8

of the Corporation;9

(5) to conduct its business without regard to10

any qualification or similar statute in any State of11

the United States, including the District of Colum-12

bia, the Commonwealth of Puerto Rico, and the Ter-13

ritories and possessions of the United States;14

(6) to lease, purchase, or acquire any property,15

real, personal, or mixed, or any interest therein, to16

hold, rent, maintain, modernize, renovate, improve,17

use, and operate such property, and to sell, for cash18

or credit, lease, or otherwise dispose of the same, at19

such time and in such manner as and to the extent20

that it may deem necessary or appropriate;21

(7) to prescribe, repeal, and amend or modify,22

rules, regulations, or requirements governing the23

manner in which its general business may be con-24

ducted;25


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(8) to accept gifts or donations of services, or1

of property, real, personal, or mixed, tangible, or in-2

tangible, in aid of any of its purposes; and3

(9) to do all things as are necessary or inci-4

dental to the proper management of its affairs and5

the proper conduct of its business.6

(b) EXPENDITURES.Except as may be otherwise7

provided in this title, in chapter 91 of title 31, United8

States Code, or in other laws specifically applicable to9

Government corporations, the Corporation shall determine10

the necessity for, and the character and amount of its obli-11

gations and expenditures, and the manner in which they12

shall be incurred, allowed, paid, and accounted for.13

(c) EXEMPTION FROM CERTAIN TAXES.The Cor-14

poration, including its franchise, capital, reserves, surplus,15

mortgages or other security holdings, and income shall be16

exempt from all taxation now or hereafter imposed by the17

United States, by any territory, dependency, or possession18

thereof, or by any State, county, municipality, or local tax-19

ing authority, except that any real property of the Cor-20

poration shall be subject to State, territorial, county, mu-21

nicipal, or local taxation to the same extent according to22

its value as other real property is taxed.23

(d) EXCLUSIVE USE OF NAME.No individual, asso-24

ciation, partnership, or corporation, except the bodies cor-25


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porate named under section 101, shall hereafter use the1

words Federal Mortgage Insurance Corporation or any2

combination of such words, as the name or a part thereof3

under which the individual, association, partnership, or4

corporation shall do business. Violations of the foregoing5

sentence may be enjoined by any court of general jurisdic-6

tion at the suit of the proper body corporate. In any such7

suit, the plaintiff may recover any actual damages flowing8

from such violation, and, in addition, shall be entitled to9

punitive damages (regardless of the existence or nonexist-10

ence of actual damages) of not exceeding $100 for each11

day during which such violation is committed or repeated.12

(e) FISCAL AGENTS.The Federal Reserve banks13

are authorized and directed to act as depositories,14

custodians, and fiscal agents for each of the bodies cor-15

porate named in section 101, for its own account or as16

fiduciary, and such banks shall be reimbursed for such17

services in such manner as may be agreed upon; and each18

of such bodies corporate may itself act in such capacities,19

for its own account or as fiduciary, and for the account20

of others.21

SEC. 207. EXEMPTIONS.22

(a) SECURITIES EXEMPT FROM SEC REGULA-23

TION.24


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(1) IN GENERAL.All covered securities in-1

sured or guaranteed by the Corporation shall, to the2

same extent as securities that are direct obligations3

of or obligations guaranteed as to principal or inter-4

est by the United States, be deemed to be exempt5

securities within the meaning of the laws adminis-6

tered by the Securities and Exchange Commission.7

(2) CONFORMING AMENDMENT.The first sen-8

tence of section 3(a)(2) of the Securities Act of 19339

(15 U.S.C. 77c(a)(2)) is amended by inserting or10

any covered security, as such term is defined under11

section 2(9) of the Housing Finance Reform and12

Taxpayer Protection Act of 2013; after Federal13

Reserve bank;.14

(b) QRM EXEMPTION.Section 15G(e) of the Secu-15

rities Exchange Act of 1934 (15 U.S.C. 78o-11(e)) is16

amended17

(1) in paragraph (3)(B)18

(A) by striking Association, the and in-19

serting Association and the; and20

(B) by striking and the Federal home21

loan banks; and22

(2) by adding at the end the following:23

(7) COVERED SECURITIES INSURED BY THE24

FEDERAL MORTGAGE INSURANCE CORPORATION.25


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Notwithstanding any other provision of this section,1

the requirements of this section shall not apply to2

any covered security, as such term is defined under3

section 2(9) of the Housing Finance Reform and4

Taxpayer Protection Act of 2013, insured or guar-5

anteed by the Federal Mortgage Insurance Corpora-6

tion or any institution that is subject to the super-7

vision of the Federal Mortgage Insurance Corpora-8

tion..9

Subtitle BOversight of Market10

Participants11

SEC. 211. APPROVAL OF PRIVATE MORTGAGE INSURERS.12

(a) STANDARDS FOR APPROVAL OF PRIVATE MORT-13

GAGE INSURERS.14

(1) IN GENERAL.The Corporation shall de-15

velop, adopt, and publish standards for the approval16

by the Corporation of private mortgage insurers to17

provide private mortgage insurance on eligible mort-18

gages.19

(2) REQUIRED STANDARDS.The standards re-20

quired under paragraph (1) shall include21

(A) the financial history and condition of22

the insurer;23

(B) the adequacy of the insurers capital24

structure, including whether the insurer has25


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sufficient capital to cover the first loss insur-1

ance obligations it assumes under this Act and2

that might be incurred in a period of economic3

stress, including, but not limited to, any period4

of economic stress that would result in a 305

percent (or greater) national home price de-6

cline;7

(C) the general character and fitness of8

the management of the insurer, including com-9

pliance history with Federal and State laws;10

(D) the risk presented by such insurer to11


(E) the adequacy of insurance and fidelity13

coverage of the insurer;14

(F) a requirement that the insurer submit15

audited financial statements to the Director;16

and17

(G) any other standard the Corporation18

determines necessary or appropriate.19

(b) APPLICATION ANDAPPROVAL.20

(1) APPLICATION PROCESS.The Corporation21

shall establish an application process, in such form22

and manner and requiring such information as the23

Corporation may require, for the approval of private24

mortgage insurers under this section.25


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(2) APPROVAL.The Corporation may approve1

any application made pursuant to paragraph (1)2

provided the private mortgage insurer meets the3

standards adopted under subsection (a).4

(3) PUBLICATION.The Corporation shall5

(A) publish in the Federal Register a list6

of newly approved private mortgage insurers;7

and8

(B) maintain an updated list of approved9

private mortgage insurers on the website of the10

Corporation.11

(c) REVIEW, SUSPENSION, AND REVOCATION OF AP-12

PROVED STATUS.13

(1) IN GENERAL.The Corporation may review14

the status of any approved private mortgage insurer15

if the Corporation is notified of or becomes aware of16

any violation by the insurer of this Act or the rules17

promulgated pursuant to this Act.18

(2) SUSPENSION OR REVOCATION.19

(A) CORPORATION AUTHORITY.If the20

Corporation determines, in a review pursuant to21

paragraph (1), that an approved private mort-22

gage insurer no longer meets the standards for23

approval, the Corporation may suspend or re-24

voke the approved status of such insurer.25


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(B) RULE OF CONSTRUCTION.The sus-1

pension or revocation of an approved private2

mortgage insurers approved status under this3

paragraph shall have no effect on the status of4

any covered security.5



of any approved private mortgage insurers who8

lost their approved status; and9

(B) maintain an updated list of such insur-10

ers on the website of the Corporation.11

(d) APPEALS.12

(1) IN GENERAL.13

(A) APPEALS OF DENIALS OF APPLICA-14

TION.A private mortgage insurer who submits15

an application under subsection (b)(1) to be-16

come an approved private mortgage insurer17

may appeal a decision of the Corporation deny-18

ing such application.19

(B) APPEALS OF DENIALS OF BENEFITS20

OR SUSPENSIONS OF PARTICIPATION.An ap-21

proved private mortgage insurer may appeal a22

decision of the Corporation suspending or re-23

voking the approved status of such insurer.24


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(2) FILING OF APPEAL.Any insurer who files1

an appeal under paragraph (1) shall file the appeal2

with the Corporation not later than 90 days after3

the date on which the person receives notice of the4

decision of the Corporation being appealed.5

(3) FINAL DETERMINATION.The Corporation6

shall make a final determination with respect to an7

appeal under paragraph (1) not later than 180 days8

after the date on which the appeal is filed under9

paragraph (2).10

(e) AVOIDANCE OF CONFLICTS OF INTEREST.With11

respect to any eligible mortgage collateralizing a covered12

security insured under this Act, an approved private mort-13

gage insurer may not provide insurance both14

(1) in satisfaction of the credit enhancement re-15

quired under section 2(11)(C); and16

(2) to cover the first loss position of private17

market holders of such covered security.18

SEC. 212. APPROVAL OF SERVICERS.19

(a) STANDARDS FORAPPROVAL OF SERVICERS.20



by the Corporation of servicers to administer eligible23

mortgages, including standards with respect to24


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(A) the collection and forwarding of prin-1

cipal and interest payments;2

(B) the maintenance of escrow accounts;3

(C) the collection and payment of taxes4

and insurance premiums;5

(D) the maintenance of records on eligible6

mortgages;7

(E) the establishment of foreclosure loss8

mitigation programs that seek to enhance inves-9

tor value and prevent, to greatest extent pos-10

sible, the need to trigger any claim on insur-11

ance offered by the Corporation pursuant to12

this title;13

(F) the advancement of principal and in-14

terest payments to investors in the case of a de-15

linquency by a borrower until such time as the16

borrower has made all payments in arrears or17

the property securing the eligible mortgage has18

been liquidated; and19

(G) implementing the terms of any loss20

mitigation and foreclosure prevention as re-21

quired by a uniform securitization agreement22

developed under section 223.23


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(2) ADDITIONAL REQUIRED STANDARDS.The1

standards required under paragraph (1) shall also2

include3


the servicer;5

(B) the general character and fitness of6

the management of the servicer, including com-7

pliance history with Federal and State laws;8

(C) the risk presented by such servicer to9


(D) a requirement that the servicer submit11

audited financial statements to the Corporation;12

and13

(E) any other standard the Corporation14


(3) COORDINATION WITH OTHER REGU-16

LATORS.In developing the standards required17

under paragraph (1), the Corporation shall18

(A) coordinate with the Bureau of Con-19

sumer Financial Protection; and20

(B) to the extent the Corporation deter-21

mines practical and appropriate, shall coordi-22

nate with the other Federal banking agencies.23



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(1) APPLICATION PROCESS.The Corporation1

shall establish an application process2

(A) in such form and manner and requir-3

ing such information as the Corporation may4

require, for the approval of servicers under this5

section; and6

(B) that does not discriminate against or7

otherwise disadvantage small servicers.8

(2) APPROVAL.The Corporation may approve9

any application made pursuant to paragraph (1)10

provided the servicer meets the standards adopted11

under subsection (a).12



of newly approved servicers; and15

(B) maintain an updated list of approved16

servicers on the website of the Corporation.17

(c) REVIEW, SUSPENSION, AND REVOCATION OF AP-18

PROVED STATUS.19

(1) IN GENERAL.The Corporation may review20

the status of any approved servicer if the Corpora-21

tion is notified of or becomes aware of any violation22

by the servicer of this Act or the rules promulgated23

pursuant to this Act, including any failure by an ap-24

proved servicer to comply with terms set forth in any25


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uniform securitization agreement developed under1

section 223.2

(2) SUSPENSION OR REVOCATION.3

(A) CORPORATION AUTHORITY.If the4

Corporation determines, in a review pursuant to5

paragraph (1), that an approved servicer no6

longer meets the standards for approval, the7

Corporation may suspend or revoke the ap-8

proved status of such servicer.9

(B) RULE OF CONSTRUCTION.The sus-10

pension or revocation of an approved servicers11

approved status under this paragraph shall12

have no effect on the status of any covered se-13

curity.14



of any approved servicers who lost their ap-17

proved status; and18

(B) maintain an updated list of such19

servicers on the website of the Corporation.20

(d) APPEALS.21

(1) IN GENERAL.22

(A) APPEALS OF DENIALS OF APPLICA-23

TION.A servicer who submits an application24

under subsection (b)(1) to become an approved25


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servicer may appeal a decision of the Corpora-1

tion denying such application.2

(B) APPEALS OF DENIALS OF BENEFITS3

OR SUSPENSIONS OF PARTICIPATION.An ap-4

proved servicer may appeal a decision of the5

Corporation suspending or revoking the ap-6

proved status of such servicer.7

(2) FILING OF APPEAL.Any servicer who files8

an appeal under paragraph (1) shall file the appeal9

with the Corporation not later than 90 days after10

the date on which the person receives notice of the11

decision of the Corporation being appealed.12

(3) FINAL DETERMINATION.The Corporation13

shall make a final determination with respect to an14

appeal under paragraph (1) not later than 180 days15

after the date on which the appeal is filed under16

paragraph (2).17

(e) PETITIONS FOR CHANGE OF SERVICER BY PRI-18

VATE MARKET HOLDERS.The Corporation shall develop19

a process by which private market holders of the first loss20

position in a covered security may petition the Corporation21

for a change in approved servicers if the private market22

holders can demonstrate that their current approved23

servicer has failed to appropriately protect their invest-24


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ment, including by failing to meet any standard identified1

under subsection (a)(1).2

SEC. 213. APPROVAL OF ISSUERS.3

(a) STANDARDS FORAPPROVAL OF ISSUERS.4



by the Corporation of issuers to issue covered securi-7

ties, including standards with respect to an issuers8

ability to9

(A) aggregate eligible mortgage loans into10

pools;11

(B) securitize eligible mortgage loans for12

sale to private investors as a covered security;13

(C) transfer investment risk and credit to14

private market participants in accordance with15

the risk-sharing mechanisms developed by the16

Corporation under section 202;17

(D) ensure equitable access to the sec-18

ondary mortgage market for covered securities19

for all institutions regardless of size or geo-20

graphic location;21

(E) create mechanisms for multi-lender22

pools; and23

(F) ensure that eligible mortgage loans24

that collateralize a covered security insured25


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under this title are originated in compliance1

with the requirements of this Act.2

(2) ADDITIONAL REQUIRED STANDARDS.The3

standards required under paragraph (1) shall also4

include5


the issuer;7

(B) the adequacy of the capital structure8

of the issuer;9

(C) the general character and fitness of10

the management of the issuer, including compli-11

ance history with Federal and State laws;12

(D) the risk presented by such issuer to13


(E) the adequacy of insurance and fidelity15

coverage of the issuer;16

(F) a requirement that the issuer submit17

audited financial statements to the Corporation;18

(G) the capacity of the issuer to secure19

first loss credit enhancement; and20

(H) any other standard the Corporation21



(1) APPLICATION PROCESS.24

7/28/2019 Housing Finance Reform

Housing Finance Reform and Taxpayer Protection Act of 2013

Documents

Transcript of Housing Finance Reform and Taxpayer Protection Act of 2013